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Phelps v. Benke

Court of Appeals of Tennessee, Nashville

January 11, 2017


          Session September 20, 2016

         Appeal from the Chancery Court for Davidson County No. 13283I Claudia Bonnyman, Chancellor.

         The appellants Josephine Phelps and Roy Smith (the "Appellants") filed suit to assert rights to a tract of real property by adverse possession. On appeal, they claim that the trial court erred in concluding that they have no possessory rights to the land at issue. In part, they argue that the appellee's counterclaim for ejectment was untimely because it was not filed within seven years of the beginning of their adverse possession. We disagree and conclude that the trial court was correct in ordering the Appellants to vacate the disputed property. The Appellants' petition for adverse possession was filed before they had adversely possessed the property for a total of seven years. Moreover, pursuant to Tennessee Code Annotated section 28-1-114, the appellee's counterclaim for ejectment related back to the filing of the Appellants' original petition. We accordingly affirm the judgment of the trial court and remand for further proceedings consistent with this Opinion.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded.

          Jean Dyer Harrison and William G. Wojcik, Nashville, Tennessee, for the appellants, Josephine Phelps and Roy Smith.

          Michele McGill, Franklin, Tennessee, and Keith H. Solomon, Brentwood, Tennessee, for the appellee, Vern Benke, Jr.

          Arnold B. Goldin, J., delivered the opinion of the Court, in which Richard H. Dinkins and Kenny Armstrong, JJ., joined.



         Background and Procedural History

         This appeal stems from a bench trial regarding competing claims to a parcel of real property in Davidson County, Tennessee. The tract at issue contains a barn and consists of 3.0 acres of land (the "Barn Property"). It is located municipally at 3437 Smith Springs Road in Antioch, Tennessee, and is adjacent to another parcel of land that contains a house (the "House Property"). The House Property consists of 2.9 acres and is located municipally at 3328 Smith Springs Road. At one time, the Barn Property and House Property were part of a single tract of land.

         By the 1980s, the land consisting of the Barn Property and House Property was owned by Virgie Alcorn. In 1984, Ms. Alcorn sold the Barn Property to Vern and Linda Benke. Although Ms. Alcorn retained ownership of the House Property incident to this transaction, the Benkes were granted an easement over the House Property for ingress and egress. Moreover, the Benkes entered into a lease purchase agreement concerning the remaining 2.9 acres containing the house. Ms. Alcorn would later sell the House Property to the Benkes in March 1986.

         In 2004, the Benkes purportedly took out a loan from IndyMac Bank in the amount of $244, 000.00. To secure the monetary obligations under the loan, a deed of trust was executed on the House Property only in favor of IndyMac Bank. Ms. Benke died unexpectedly a few short months later in February 2005. Foreclosure proceedings would eventually ensue regarding the House Property.

         According to Mr. Benke, he was not aware that a deed of trust had been placed on the House Property until after his wife's passing. However, notwithstanding his claim that the mortgage on the House Property had been taken out by his deceased wife without his knowledge, Mr. Benke did not take any action to set the deed of trust aside. He testified that, following his wife's death, he vacated both the Barn Property and House Property after the end of the 2005 winter. Mr. Benke claimed that he did not think about the Barn Property again until 2014, when a realtor contacted him and stated that she had an interested buyer for the property.

         On January 22, 2007, the Appellants purchased the House Property through the substitute trustee appointed by IndyMac Bank. Although the record reflects that the Appellants own approximately twenty properties as part of their rental property business, it is undisputed that they did not perform a survey prior to closing on the House Property. Notwithstanding their belief that they had bought the Barn Property in addition to the House Property at the foreclosure, the substitute trustee's deed contained the following metes and bounds description of the property that was purchased:

Beginning at a point in the centerline of Smith Springs Road, said point being 30 feet south of the southwest corner of an 50 feet easement for ingress and egress and the southeast corner of parcel 6; thence N 10 degrees 07 minutes E470.56 feet to a point, thence N 79 degrees 53 minutes W 335.32 feet to a point; thence S 10 degrees 07 minutes W 85.74 feet to a point; thence N 79 degrees 53 minutes W 84.0 feet to a point; thence S 10 degrees 07 minutes W 392.50 feet to a point in the centerline of Smith Springs Road; thence with said center line N 78 degrees 08 minutes W 251.45 feet to the point of beginning.

         This legal description is a description of the land contained only within the House Property.

         The Appellants moved onto the House Property within a few weeks after their purchase at foreclosure in January 2007. They made improvements to the house but also performed upkeep on the adjacent Barn Property. In addition to keeping horses on the Barn Property, the Appellants repaired fencing, mowed the grass, and sprayed for pests such as termites and hornets. The Appellants also paid taxes on the Barn Property.

         On March 5, 2013, the Appellants filed a petition in the Davidson County Chancery Court asserting a claim for adverse possession and seeking a judgment for fee simple ownership of the Barn Property. The petition stated that because efforts to locate Mr. Benke had failed, he should be served by publication. An order of publication was subsequently entered by the Chancery Court, and on May 7, 2013, the Appellants filed a motion for default judgment. Therein, the Appellants stated that publication ran in The Tennessean on four dates in March and April 2013, the last of which was April 5, 2013. Because Mr. Benke had failed to plead or otherwise defend the lawsuit within thirty days of the last date of publication, the Appellants asserted that an order of default judgment should be entered in their favor, quieting title to the Barn Property. A final judgment was later entered in the case on April 4, 2014, wherein the Appellants' motion for default judgment was granted.

         On June 9, 2014, Mr. Benke filed a motion to set the default judgment aside. The motion was supported by a memorandum of law, wherein Mr. Benke claimed that through "no purposeful avoidance or neglect, " he had previously been unaware of any litigation concerning the property. Although the Appellants opposed Mr. Benke's motion, the Chancery Court set the default judgment aside by order entered on July 31, 2014.

         On January 7, 2015, the Appellants filed an amended complaint, [1] as well as a motion for a temporary restraining order. In their motion for a restraining order, the Appellants submitted that Mr. Benke was actively attempting to sell the property at issue and argued that he should be restrained from doing so without first resolving the underlying merits of the lawsuit. On January 8, 2015, the Chancery Court entered an order denying the Appellants' request for a temporary restraining order. In support of its decision, the Chancery Court noted that the Appellants had not demonstrated a likelihood of success on the merits nor provided Mr. Benke with proper notice of their motion. Although a hearing was later set on the Appellants' application for a temporary injunction regarding the property at issue, no order was ever specifically entered on this matter.

         On January 22, 2015, Mr. Benke filed an answer to the amended complaint, as well as counterclaims to quiet title and for ejectment. Shortly thereafter, on February 2, 2015, the Appellants filed an answer to Mr. Benke's counterclaims. In their answer, the Appellants contended that Mr. Benke was not entitled to any relief due to their alleged actions of adversely possessing the disputed property for more than seven years.

         On February 10, 2015, the Appellants filed a motion to amend their answer to Mr. Benke's counterclaims. Specifically, the motion requested that they be allowed to amend their answer to assert the affirmative defense of laches. An amended answer asserting this defense was never filed, nor did the trial court ever enter an order permitting such an amendment. Although the record indicates that the Appellants submitted a draft order to the Chancery Court in August 2015 that proposed that their motion to amend be granted, the prepared order was specifically marked as "Not Entered" by the Chancellor presiding over the case.

         A bench trial was held by the Chancery Court on June 24, 2015. At the conclusion of trial, the Chancery Court issued an oral ruling concluding that the Appellants did not have any possessory rights to the Barn Property. Its specific findings were later memorialized in an "Order and Final Judgment" entered on July 28, 2015. In pertinent part, the trial court's July 28 judgment concluded as follows:

1. What property did the [Appellants] buy at the foreclosure sale?
Finding: [The Appellants] bought [the House Property]. [The Barn Property] was not included in the foreclosure.
2. Which parties have colorable title to [the Barn Property]?
Finding: Mr. Benke has a deed to [the Barn Property]. He has colorable title and is the only party with colorable title to [the Barn Property].
3. Have the [Appellants] had open and notorious possession of [the Barn Property] and what is their burden of proof?
Finding: The [Appellants] did have open and notorious possession. This was proved by maintenance of the fence and use of the property by keeping horses on it and storing of their personal property in the barn
4. Have the [Appellants] had open and notorious possession of the property for seven years so that T.C.A. 28-2-103 protects them ...

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